Luc Larocque, Sales Executive, Generix Group, Author at Global Trade Magazine

Inventory shortages lead to financial and reputational losses. Around 70% of customers abandon the online store for good after 3 unsuccessful purchase attempts. Retailers must then make sure they are in control of their inventory and that they have the best inventory visibility possible. Browns Shoes Inc. managed to eliminate most inventory problems by implementing the Generix Warehouse Management System.

In the fashion and footwear e-commerce segment, stock-outs are one of the main threats to profitability. International studies speak of billions in annual losses worldwide. Indeed, an inadequate stock, out of sync with customer demand, increases the inventory storage cost and results in unrealized sales. It can prove to be difficult to dispose of those extra items, and a retailer may even need to destroy them. It is estimated that the losses can reach about 10% of the annual revenue for online clothing and footwear stores.

The challenge: Satisfying the evolving needs of the end customer

There is another side to the problem of stock shortage, and that is the consequences it has on the consumer. We are talking about the fashion segment, in which impulse buying has an important role to play. According to a study by Harvard Business School, the lack of stock causes around 9% of buyers to give up the purchase if they do not find what they are looking for right away, 37% will opt for another brand and 21% will search in another online store. When out-of-stock is repeated three times, 70% of customers will not visit the online store again. An out-of-stock situation, therefore, results not only in immediate but also in future losses, as it has a direct impact on the reputation of the company and the brand. Companies like Browns Shoes have customer service standards they want to maintain, and as customer demands change and evolve, the technology used by retailers must evolve too.

How to avoid stock-out problems?

The demand forecasting solution is not always easy to achieve and is undoubtedly one of the great challenges of the logistics world in general. What is essential in this sector is to have an automated Warehouse Management System that is robust and integrated with the rest of the management tools. These systems allow retailers to fix their inventory problems. The Generix WMS facilitates complete and real-time inventory management and optimizes the logistic flows outside and inside the warehouse. It also allows to control the availability of each item and to anticipate possible stock shortages.

Of course, a Warehouse Management Solution is an essential step for an automated warehouse management, but in addition to facilitating operations, the system allows to control the flow of each product in real time, and thus, obtain statistical data that helps understand which products generate the most revenue for the company and adjust supply policies in the long term, improving overall profitability.

The WMS systems are a key element in minimizing the risk of stock shortage, which in the fashion world can be a serious problem that threatens the profitability of the company.

Technology’s constant evolution is there to help business owners adapt and automate their warehouses. Click Here to find out more about the role of automation in the warehouse and its benefits.

How Browns Shoes prevents inventory shortages: A case study

Browns Shoes is a family-owned business that in 2014 decided to invest in a new facility. A warehouse was going to be built and fitted with the most advanced systems for inventory management. The goal for Browns’ Omni-Channel distribution center was to be well equipped to respond to the evolving needs of Browns’ clientele. One of the main advantages in warehouse automation is achieving inventory accuracy. According to an interview with Alexandre Hubert, Browns Shoes’ Supply Chain Director, “In less than 6 months after implementing Solochain, we achieved 99%+ inventory accuracy”. Inventory accuracy helps Browns Shoes maintain its reputation as an efficient and effective footwear retailer and avoid the hidden costs of out-of-stock inventory. Precise data and inventory visibility also guide Browns Shoes in the decision-making process, allowing them to take advantage of all possibilities of improvement.

As omni-channel driven demands become the norm, with resulting customer satisfaction harder to achieve, supply chain professionals need to leverage advanced WMS technology to keep their operations nimble, efficient, and scaling – especially in these volatile times. Given Generix Group’s completeness of vision and ability to execute, as recognized once again by the Gartner analyst community, their Solochain WMS is well positioned to help companies needing a modern, flexible and agile solution that can easily adapt to their changing needs. More Information about Generix WMS .

This article originally appeared on GenerixGroup.com. Republished with permission.

Is your supply chain strong and fit, or fragile and weak? A new report from Gartner helps you determine the answer and work toward a stronger, more resilient future.

Is your supply chain fit, fragile, or somewhere in the middle of the spectrum? This is a question that more organizations are asking themselves right now as they balance high levels of demand with constraints like supply chain shortages, port congestion, a dearth of ocean containers, and a short supply of qualified truck drivers.

Much like an amateur or professional athlete focuses on maintaining a certain level of fitness to be able to compete effectively, a company’s supply chain deserves the same level of attention (if not more). In a new report, Gartner explores the correlation between a fit supply chain and a resilient one, knowing that both elements are critical in today’s uncertain business environment.

Fit For Purpose

According to Gartner, the term “fit for purpose” describes an approach where planning leaders focus on what they should be doing, instead of benchmarking what others are doing—but that may not necessarily work for their own organizations.

Supply chain planning leaders that define their function’s fit for purpose and choose a corresponding organization design will improve their results and be better aligned to the overall business, Gartner says.

“Many supply chain planning leaders ask themselves if they should organize their function in a more centralized or decentralized way,” said Gartner’s Ken Chadwick, in a press release. “To answer that question, they must first understand what their individual fit for purpose organization looks like.”

To design a fit for purpose planning organization, Gartner says supply chain leaders must consider their companies’ business and operating model as well as the operational mindset. They must also understand the business and operating model of the overall company – customer base, products, serviced markets – and determine to what extent those factors are changing.

“Some companies are now moving from global to more regionalized supply networks because global networks are less resilient when it comes to disruptions, such as trade wars or the COVID-19 pandemic,” Chadwick said. “On the other hand, there are companies that want to try a more centralized approach to better serve their key customers.”

Gaining Competitive Advantages During Disruption

Fit supply chains can move ahead of the competition after dealing with the high-impact events, while fragile supply chains fall behind. According to Material Handling & Logistics, the most fragile supply chain operators focus on short-term survival, while the fittest supply chain organizations see disruptions as inflection points to improve the value that the supply chain provides to the business.

“Disruption is not a short-term situation, but a long-term trend that will most likely accelerate as we face climate change impacts, global power balance shifts, and more,” Gartner’s Simon Bailey told MH&L.

“In the future, disruptions will occur more frequently and supply chains must be able to deal with whatever is coming next,” he continued. “Some supply chain leaders have understood that already and prepared their organization accordingly.”

Step by Step Approach

Creating a stronger, more resilient supply chain requires a focus on what’s important to the company, both in terms of operations and decision making. Some companies’ mindsets focus on business unit accountability, for instance, so they align planning to a commercial leader who owns those outcomes.

Other companies are driving an end-to end mindset, leading to one integrated planning organization serving enterprise outcomes, with mindsets related to cost-focus, customer experience, innovation, agility, resilience, and risk also significantly impacting how planning leaders organize.

“When planning, leaders know about their organization’s present and future operating model and mindset,” Chadwick added, “they can in turn think about what their own function should look like to best fit in and serve its purpose.”

When creating fit supply chains, companies can choose among decentralized, center-led, or centralized models. Using the organization’s overall operating model and mindset as a guide, Gartner says supply chain planning leaders can evaluate if a decentralized, center-led, or centralized model is the best design for their function. Here’s what each of these looks like and how it operates:

-In a decentralized model, all planning roles report into the separate business unit leaders. This approach makes sense for large portfolio companies with mostly independent business units.

-The center-led model leaves planning operations within the business units but creates roles at a global level that focus on planning processes and long-term planning.

-Finally, in the centralized model, all elements of supply chain planning report into an integrated planning leader who is running all aspects of planning across the different regions.

Remember that different companies will take different paths to “fitness,” and that these variations are expected and perfectly normal. “There really is no one-size-fits-all solution for a planning organization, nor is a decentralized model necessarily a sign of lesser maturity,” Chadwick concluded. “Planning leaders must evaluate their individual situation and future plans and design their function accordingly.”

Generix Group North America provides a series of solutions within our Supply Chain Hub product suite to create efficiencies across an entire supply chain. From Warehouse Management Systems (WMS), Transportation Management Systems (TMS) to Manufacturing Execution Systems (MES), such platforms can deliver a wide range of benefits that ultimately flow to the warehouse operator’s bottom line. Our solutions are in use around the world and our experience is second-to-none. We invite you to contact us to learn more.